Salesforce Analysts Reassured Ahead of Fourth-Quarter Report

JPMorgan surveyed Salesforce partners, to positive results. Morgan Stanley affirmed its buy rating on the producer of customer-relationship-management software.
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As Salesforce.com  (CRM) - Get Report investors await the company's fourth-quarter earnings report, analysts at JPMorgan and Morgan Stanley updated their coverage of the provider of customer-relationship-management software.

In the quarter JPMorgan surveyed Salesforce partners, and the results bolstered the firm’s view that the San Francisco company on Feb. 25 would report a “strong wave of renewals ... as customers desire coterminous contracts including Tableau.”

JP Morgan’s survey also showed that Salesforce partners continue to see more than four years of runway for the company to grow at a 20% rate, “driven by continued innovation as a recurring theme, along with strong competitive positioning and acquisitions.”

Meanwhile, analysts at Morgan Stanley maintained their buy rating and $225 price target as Salesforce looks “well positioned to beat consensus fourth quarter expectations and raise the preliminary fiscal 2021 revenue guidance.”

Morgan Stanley says investors will focus on current remaining performance obligations, with the firm estimating 25%-plus year-over-year growth in CRPO, above the consensus guidance of 21%. CRPO, Salesforce's website says, is revenue under contract that is expected to be recognized as revenue in the next 12 months.

The firm also expects CRM's management to increase its initial fiscal 2021 revenue guidance close to $21 billion at the midpoint. Morgan Stanley’s guidance calls for an 18.5% profit margin in the fiscal year.

“Salesforce remains one of our best secularly positioned names, given enterprise-IT spend prioritized towards digital transformation," the note says. 

"We see the company as a long-term share gainer within an estimated more than $200 billion total addressable market.” 

At last check Salesforce shares were off 0.9% to $191.23.